The Untouchables

I read a piece on the Seattle Post Intelligencer today that kind of amused me.

The plot revolves around the ‘Seattle Speakeasy Seven’, a gang of wannabe gangsters accused of running an illegal gambling operation in and around Seattle, recently exposed after a 4-year investigation by the city’s vice squad and state gambling officials.

Read the piece and you cannot help but be transported back in time to the 1920’s and the heady days of Prohibition.

Honestly, it could be a scene straight out of Bugsy Malone. For Fat Sam and Knuckles read DK Pan and his trusty sidekick Bill Donnell III. From several delightfully seedy sounding establishments, including a poker room in the now defunct Bit Saloon and a storage facility in ‘Tubs’ (where patrons could previously rent hot tubs by the hour), the wannabe mobsters allegedly ran their dodgy criminal enterprise.

I know this sorry tale revolves around wholly terrestrial activities but I could not help but relate this to the pickle that our North American friends seem to have got themselves into over their somewhat half-hearted ban on online poker.

Have they learned nothing from the Prohibition? In particular the unintended side effect of increasing the grip of criminal gangs who history shows will willingly fill the void created by attempting to ban something that so many of your people do and will continue to do regardless of well intentioned but misguided state intervention.

Never has history better shown that banning stuff that so many of your citizens do anyway is at best futile and at worse dangerous. Don’t ban it – licence it, regulate it, and protect your citizens by pulling the plug on the mobsters.

Allow your citizens the freedom to choose how they spend their leisure time and money. And at the same time stake your claim on all that lost tax revenue that is already out there swilling around just waiting to be put to better use.

Pub quiz on poker

Let’s start off with a little poll.  Please play along.

I’m going to stick my neck on the line here and suggest the pub quiz box is likely to be the clear winner.

Needless to say, always the contrarian, poker gets my vote. If you read my last post on this you’d already know that I consider poker to be a game of skill and therefore not really gambling. 

The biggest common denominator in all but one of the above options is that your investment (or stake) relies wholly on the performance of other people.  Except of course, poker.  Does this fact alone not distinguish poker from other forms gambling?  The way I see it, for poker to qualify as gambling you’d need to be betting on the outcome of a poker tournament – not actually taking part in one.

When you play poker for money you invest in your own ability.  It is your experience, knowledge and ability that will determine how well you do.  As I pointed out in my earlier piece on this, 75% of all poker hands win without any cards being shown.  By definition this means that 75% of the time what makes you a winner is not what cards you have been dealt, but how you play them.

I went to a quiz night at my daughter’s school a few weeks ago.  I remember one question in the music round was to identify the nationality of the mighty rock band Midnight Oil.  I knew the answer because I saw them perform live in a pub in Sydney during my gap year in 1979.  No one else on the team had a clue, so I guess we were lucky right?

Does that mean a pub quiz is a game of chance or a game of skill?  It’s a game of skill of course.  The winning team will usually be the most knowledgeable.  Just watch an episode of Eggheads if you doubt my wisdom on this.  Sure, occasionally skill, experience, and knowledge will be overcome by a bit of good fortune.  But generally speaking, in a pub quiz the strongest team will prevail.

Likewise with poker, the stronger players will generally progress further in tournaments than the weaker ones.  That’s why the same faces appear so regularly on main event final tables.

So what is the fundamental difference between a pub quiz and a game of poker?  And why is one classed as gambling and the other not?

Buggered if I know…

Bad luck?

Is poker gambling or not? It’s a debate that has been raging ever since the Americans passed the UIGEA (Unlawful Internet Gaming Enforcement Act) in 2006, forcing some of the biggest operators in the online Poker industry to stop accepting players from the US, including PartyGamingSportingBet, 888 and bwin.

As public companies their appetite for risk was clearly tempered by their long-term fiduciary duty to their shareholders and I guess they had no choice but to withdraw from the American market despite the catastrophic short-term effect on their share prices.

Here’s what I think. Lumping poker into the scope of the UIGEA is harsh because I don’t consider poker to be a form of gambling. Bingo is proper gambling. Scratch cards and lottery tickets are proper gambling. Slot machines, roulette and other casino games – proper gambling. It doesn’t matter how experienced you are, chance is the only determinant.

The Oxford English Dictionary simply defines ‘gambling’ as “playing games of chance for money”.

To the uninitiated it’s easy to see why you may think poker is a game of chance. The best cards will always win and you cannot control which cards you are dealt right?

Wrong. OK, it’s true that the best cards at the end of any given round will always win. However, in online poker over 75% of hands don’t end in a showdown, so the cards you are dealt are largely irrelevant, because over 75% of the time no-one gets to see them.

What counts in poker is not what cards the dealer gives you, but what you do with them. The quality of the decisions you make based on your table position, the size of your chip stack, the betting behaviour of those around you, your ability to read ‘tells’ accurately, your understanding and application of pot odds – all will play a much more important role in your success than the cards you are dealt.

There is a massive market for poker books, periodicals and instructional websites. None focus on luck as being an important component in your poker game play. And come to think of it, I don’t recall seeing a huge selection of bingo or lottery winning strategy books in my local library.

As a keen amateur player myself, I find luck does creep in, but more bad luck than good luck. If you play the game well every time you go into a showdown you should hold the strongest hand. If you then get beaten, that is bad luck. However, mathematically you have played correctly and in the long term you will win more than you lose in that situation. If you go into a showdown with the weakest hand and you win, you have played badly and got lucky – and mathematically in the long term you will lose more than you win in that situation.

Respected journalist, author and poker ninja Victoria Coren knows her stuff. In her excellent For Richer For Poorer: A love affair with Poker she dismisses Roulette as a mug’s game: “Thank God, my old roulette habit has been channelled into poker, which offers the same adrenaline but can, slowly and gradually if I study the game, be controlled by skill and judgement”.

Charles Nesson, a Harvard law professor and founder of The Global Poker Strategic Thinking Society, takes a similar albeit less instinctive view. Nesson sees in poker “a language for thinking about and an environment for experiencing the dynamics of strategy in dispute resolution”.

Garry Kasparov, a chess grandmaster, argues that poker offers lessons on chance and risk management that even his own beloved game can’t. Many chess professionals are moving into poker, not least because the money is better.

I don’t think many right minded person would consider chess to be a game of chance.

Earlier this year a Dutch Court ruled that poker is a game of skill not chance and there is an interesting case currently being deliberated on by the South Carolina Supreme Court, the outcome of which will be interesting.

Above all, there is one very simple, glaringly obvious fact that proves beyond all reasonable doubt in my simple mind that poker has to be a game of skill.

Just take a look at the World Series of Poker (WSOP) Hall of Fame. The top three players, who have all won more than 10 WSOP bracelets over careers spanning 20 years, have accumulated poker winnings in excess of $13m having cashed on over 150 occasions.

Nobody can possibly get lucky that many times! It’s as ridiculous as claiming that golf is a game of chance and Tiger Woods just got lucky.

What I cannot quite get my head around is why anyone, most of all the law makers of the world’s greatest superpower would consider poker to be a game of chance?

Have they never played the game?

One-legged man on course to win arse-kicking contest

I love Boris. Don’t assume from that I’m a Tory. I love Boris because I warm to politicians with personality and who don’t take themselves too seriously.

Three days ago Boris wrote a piece in the Telegraph in which he took a swipe at an article in the Sunday Times titled “Gordon Brown on course to win election”. This possibly bold assertion was based on the results of a YouGov survey which placed the Blues on 37%, as against 35% for the Reds – the closest gap between the parties in more than two years.

Boris playfully suggested an alternative equally implausible headline could have been “One-legged man on course to win arse-kicking contest” before suggesting that we’d be better off forgetting the polls and keep an eye on the bookies instead. “The reason I trust the punters of Betfair more than I trust a poll in a Sunday paper is that the punters have thought it through with the care of those investing their own money” barked Boris.

This got me thinking about the reason why prediction markets appear to outperform polls. Is an opinion any more valuable when it is expressed through a financial interest in the outcome? I’m not convinced because as all Betfair punters know the margin between a good bet and a bad bet is very slender indeed.

I and many fellow Betfairians often put money on the drop dead favourite not winning the race (or game) as the odds can be very attractive. This is commonly known as laying the leader. It does not mean I believe the favourite won’t win by the end of the race, it simply means fluctuating fortunes (and therefore odds) are likely to present me with opportunities to trade my position profitably before the race finishes.

By the same token, it can therefore often pay to back the one-legged man to win the arse-kicking contest at very long odds because we have seen time after time that the implausible has an alarming albeit occasional propensity to take us by surprise.

Poker is an interesting game. Anyone who plays Texas Hold ‘Em seriously will know that fun money or friendly games just don’t work. In order for poker to work properly the element of risk is required. Without risk it is simply a game of luck and the person with the best cards will win any given hand. I guess this in a way supports the notion that predictions based on a financial stake are more accurate than simply asking someone for an opinion or voting intention.

Anyway, regardless of the merits of prediction markets versus polls, I doubt one can argue against a combination of data from both providing the ‘belt and braces’ solution to predicting the outcome of the forthcoming UK General Election.

And that is exactly what Betfair has done in partnership with leading research agency ComRes when it’s excellent new Election Predict 2010 website launched yesterday.